The scary drop down to 5,119 for the S&P 500 (SPY) in early August was quite the wake up call for investors. Gladly, they answered that call with a near non-stop rally back to Thursday’s close of 5,543.
Everything about this rally feels like righting past wrongs. As in there was no real need for stocks to correct that much in the first place. This compelled investors to rush back into the market in true FOMO fashion.
Let’s review what just happened...what comes next...and the best way to position yourself to beat the market in the weeks ahead.
Market Commentary
First, we should tackle the price action as stocks have quickly broken back above all the key technical levels as you can see in the chart below:
Moving Averages: 50 Day (yellow) @ 5,460 > 100 Day (orange) @ 5,322 > 200 Day (red) @ 5,058
Things are always clearer in hindsight. Plain and simple, the main cause for the early August correction was the reversal of the Japanese Yen Carry Trade. This was a quick and nasty worldwide investment event which resulted from so many people rushing for th exits at the same time.
As the smoke cleared, the additional fears bantered about, like increased risk of recession, were quickly dismissed. Part of that was the string of positive economic reports that came afterwards. The other part was PPI and CPI reports showing that inflation continues to come down clearing the pathway for the Fed to lower rates at their next meeting on September 18th.
In total investors wasted no time seeing the correction for the attractive “buy the dip” opportunity that it truly was. Those who were asleep at the wheel most certainly got the memo Thursday with the emphatically positive Retail Sales report. This had stocks leaping ahead and clearing the final hurdle of the 50 day moving average.
It is hard to be seriously negative about stocks in the midst of a bull market. Especially true when the Fed is about to serve up the tried and true catalyst of lower rates.
As the saying goes: Don’t Fight the Fed!
Which means when they are becoming more accommodative (aka lowering rates) it is wise to be long stocks.
I suspect that stocks will retest the S&P 500 highs of 5,669 between now and the Fed meeting on 9/18. That is a little more than 2% above Thursday’s close.
Those looking for even better returns should consider some of the more Risk On groups like:
- Small and Mid Caps
- Economically Sensitive Industries like: Basic Materials, Industrials, Energy, Consumer Discretionary
- Groups that Benefit from Lower Interest Rates: Auto, Housing, Bonds, Income Stocks Banks
And as always, stocks flexing their muscles with strong POWR Ratings.
This 118 factor check makes sure we are looking at healthy growing companies that are attractively priced. The kind of stocks that always have...and always well be in fashion which explains the average annual return of +28.56% since 1999.
The bad news is that there are over 1,300 attractive POWR Ratings stocks right now.
The good news is that you can discover my personal favorites in the next section...
What To Do Next?
Discover my current portfolio of 9 stocks packed to the brim with the outperforming benefits found in our exclusive POWR Ratings model. (Nearly 4X better than the S&P 500 going back to 1999).
All of these hand selected picks are all based on my 44 years of investing experience seeing bull markets...bear markets...and everything between.
And right now this portfolio is beating the stuffing out of the market.
If you are curious to learn more, and want to see my 9 timely stock recommendations, then please click the link below to get started now.
Steve Reitmeister’s Trading Plan & Top 9 Stocks >
Wishing you a world of investment success!
SPY shares were trading at $552.97 per share on Friday morning, down $0.10 (-0.02%). Year-to-date, SPY has gained 17.08%, versus a % rise in the benchmark S&P 500 index during the same period.
About the Author: Steve Reitmeister
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.
Are Stocks in FOMO Rally? StockNews.com
